Inflation may have hit a nine-month low of 7.45 per cent in October, but concerns over price rise have not ended. K.C. Chakrabarty, Deputy Governor of the Reserve Bank of India, said that inflation cannot come down all at once. “It (inflation) is today at (around) eight per cent. It will not come down at one go. It will go down gradually,” he said on Friday after meeting the Chief Ministers of the northern States..............
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Saturday, November 17, 2012
Subbarao warns against non-inclusive growth, casino banking
.....Inaugurating two-day international conference on 'Leveraging cooperative advantage', organised by the RBI-run College of Agricultural Banking as a part of International Year of Cooperatives of the UN in Pune, Subbarao said, "The recent financial crisis has taught us some very important lessons. "The general disenchantment with 'casino banking' in certain developed economies underscored the dangers of over-financialisation of the real economy," Subbarao said. Casino banking is the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits.......
FM proposes, RBI disposes on licences
....The finance minister reasoned on Thursday that “the power or the authority” which the RBI wants is already available in the other provisions of the law and with the central bank’s own regulations and guidelines for new banking licences. “We are only formalising them by amending the Banking Regulation Act. And I have assured RBI that the Act will indeed be amended, hopefully in the Winter Session of Parliament, and if not in the Winter session, then in the Budget session.” The minister also said that even if the RBI proceeded to receive applications and process them, the first banking licence was not likely to be issued in the next 6-8 months. “So by the time the licence is issued and the banks come into existence, the Act would have been amended.” Subbarao proffered a correction, saying it will take at least 8-9 months to issue the first new bank licence if the Act is amended in the Winter Session which begins on November 22..........
'MSC bank not yet eligible for licence'
PUNE: Reserve Bank of India (RBI) Governor D Subbarao said on Friday that the apex bank was still working on measures to make the Maharashtra State Cooperative (MSC) Bank eligible to apply for a banking license. "There are some issues regarding the credit and debt recovery and the bank is working on it," he said while speaking to reporters after delivering the keynote address on leveraging cooperative advantage at the two-day international conference on cooperation. It was organised at the city-based College of Agricultural Banking.............
Learning from the HSBC mess - G Sreekumar & L Prakash Sai
.....While “tailoring banking solutions to suit individual needs” and “personalising services”, banks need to ensure that they do not tread on legal and regulatory requirements. It may be “one world”, but jurisdictions are many, and being present in several at the same time entails having to tailor ones processes and compliance to meet stringent requirements across the world........
Sreekumar is General Manager of the Reserve Bank of India, currently on sabbatical at the Indian Institute of Technology, Madras. Sai is Professor at the Department of Management Studies at IIT Madras.
Read - BS
RBI officials skip meet on mining issue
PANJIM: The Reserve Bank of India, which earlier had agreed to visit the state and talk to the banks about the restructuring of loans of truckers who are suffering due to the mining recession, did not visit the state, and have apparently withdrawn their resolve for the moment. The news comes close on the heels of the State Government committee, which was tasked with the job of collecting information of aggrieved truckers itself admitted that most of the trucks were either owned by mining companies or illegally owned by government servants, policemen, politicians with less than one-fourth of them being genuine sufferers. The Regional Director of the Reserve Bank of India did not visit the state as scheduled indicating that the RBI had withdrawn its gracious hand........
Problems in opening bank accounts are being addressed: FinMin
NEW DELHI, NOV 16:
In the backdrop of complaints from states that people are facing difficulties in opening bank accounts using Aadhaar card, the Finance Ministry on Friday said the issue is being addressed through organising mass camps for the purpose. “States’ concerns were very valid that account opening is difficult, which we admit that there is difficultly. So the idea would be to admit the problem and then find a solution. We are going ahead with that,” Financial Services Secretary D K Mittal said here...........
A deluge of offers
Almost everyday we wake up to the news that RBI has begun easing liquidity in the financial system. Over the last few weeks, it has reduced the CRR by 50 basis points or 0.50 per cent, thereby infusing liquidity to the tune of Rs.35,000 crores into the banking system. As we all know, CRR is Cash Reserve Ratio, a percentage of amount that all banks will have to deposit with RBI as per the rates prescribed by the central bank from time to time.........
India Inc wakes up to Indian Ink
....Sectoral regulators such as Sebi, Reserve Bank of India, oil and gas regulator Directorate general of Hydrocarbons and telecom regulator TRAI, pharma regulator etc are covered by the Act and have designated chief public information officers to address RTI queries. Many of these regulators including RBI and Sebi are putting in constant efforts to put up a significant portion of their dealings in public domain through their respective websites......
A tax formula to beat inflation
.....If the RBI Governor D. Subbarao had studied engineering and not physics in the IITs, he would have known that engineers often use a three-term control system — the first to control the function, the second to control the integral of the function and the third to control the differential of the function. In economics, that would have been taxing incomes, wealth and change in incomes. For some reason or other, economists are interested only in taxing incomes and wealth and not changes in income. That is a pity because inflation is directly related to increases in (money) incomes. Theoretically, if changes in incomes are taxed, inflation should tend to become zero........
FDI in banking
It is evident that the RBI, which is the regulator of the banking sector, had a strong case for issuing elaborate guidelines on bank ownership to ensure diversification. Those reasons retain their relevance even today. So there is no case for altering them, especially if the evidence suggests that accessing foreign equity, if needed, to enhance the capital of banks is possible within the current regulatory framework..........
Friday, November 16, 2012
RBI Governor to inaugurate International Conference on Cooperatives in Pune on November 16, 2012
Dr. D. Subbarao, Governor, Reserve Bank of India will inaugurate and deliver a key-note address at a two-day International Conference on Cooperatives on November 16, 2012 in Pune. The conference is being hosted by the Reserve Bank’s College of Agricultural Banking, Pune on November 16 and 17, 2012 to commemorate the International Year of the Cooperatives.........
Not the right time to abolish CRR - S.S.Tarapore
....The Government, in desperation, is turning to scrutiny of the RBI balance-sheet. A central bank’s balance-sheet cannot be examined on the lines of a corporate balance-sheet. When the central bank shows high profits, it often indicates that the economy is precariously placed. Per contra, when the central bank shows low profits as its foreign assets form a larger proportion of its assets, it reflects strength of the economy. The Government is welcome to study the RBI balance-sheet and, in fact, should do so to better understand the central bank’s imperatives........
Panel struggles to find Gokarn's replacement
A panel looking for a replacement for Subir Gokarn, whose three-year term as a Reserve Bank of India deputy governor ends in a week, has been unable to find many eligible candidates. Of the three shortlisted so far, only one has confirmed interest. The search committee, headed by RBI Governor D Subbarao, will have a third meeting on Monday to consider a few more names for the position that falls vacant on November 23. The committee was also considering an extension for Gokarn, sources said..........
SBT launches zonal office at Kollam
State Bank of Travancore (SBT) has opened its ninth zonal office in Kollam on Monday. Union Minister for Labour and Employment Kodikkunnil Suresh inaugurated the office at Arpan Towers, Kadappakkada, an official spokesman said here. P. Nanda Kumaran, Managing Director, SBT, presided over the function. Sajeev Krishnan and E. K. Harikumar, Chief General Managers, were present. Salim Gangadharan, Regional Director, RBI, Kerala-Lakshadweep, delivered the keynote address..........
New MD for Maharashtra State Co-operative Bank
Maharshtra State Co-operative Bank (MSCB) has appointed Pramod Karnad as the new Managing Director of the bank. Karnad was officiating as the Managing Director for the past 20 months, the bank said in a statement..........
RBI fiat on reporting attempted fraud cases
The Reserve Bank of India on Thursday said henceforth banks need not report attempted fraud cases of Rs 1 crore and above to the regulator’s Fraud Monitoring Cell. However, banks should continue to place such cases before the audit committee of their own board........
'Chanda Kochhar most powerful businesswoman'
ICICI Bank MD and CEO Chanda Kochhar has been named as the most powerful women in business in India for the second consecutive year by Fortune Magazine........
Read - Express India
A model banker for rural India
....the kind of proximity and access to the banking system that Sharma provides is almost non-existent in most of rural India; only 39% of the rural population has a bank account, and 73% does not have access to the formal credit system. It is a problem the government has made intermittent efforts to address. In August, the Reserve Bank of India (RBI) asked banks to make financial inclusion —delivering financial services to the poor and the unbanked—more meaningful and urged them to examine the quality of their local managers known as ‘business correspondents.’.......
Ernakulam to be declared first district with 100% banking
KOCHI, NOV. 15:
Ernakulam is set to become the first district in the country to have 100 per cent banking. The district will be dedicated to the nation as the first one having Meaningful Financial Inclusion on November 22 at a function here. Chief Minister Oommen Chandy, State Finance Minister K.M. Mani, Union Minister K.V. Thomas, RBI Governor D. Subbarao, UID Chairman Nandan Nilekani and CEOs of major banks are expected to attend the function...........
RBI keen to amend banking regulation bill
The Reserve Bank of India (RBI) is keen on the amendment of the banking regulation bill and the central bank wants powers including inspection of associates and dissolution of the bank board. They are keen about mandating these through the amendment of the banking regulation bill........
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Interest rate cut would depend on inflation: Chakrabarty
New Delhi: Indicating that the reduction in key interest rate would depend upon price situation, RBI Deputy Governor K C Chakrabarty on Thursday said its comfort level for inflation is 4-5 percent. "We are looking for 4-5 percent inflation which is our comfort level," he said on the sidelines of the meeting of heads of public sector banks with Finance Minister P Chidambaram here..........
Falling core inflation may prompt RBI to cut rates: Crisil
Falling core inflation on the back of slowing economic growth is likely to create space for the Reserve Bank to ease monetary policy in the early part of the next year, rating agency Crisil said today..............
Set right debt recovery tribunals
Announcing the last credit policy review, the RBI mentioned that the rise in non-performing assets (NPAs) was ‘disturbing.’ The reference was to the steep rise in NPAs of the banking sector in the first quarter of the current fiscal, from 2.9 per cent in March to 3.25 per cent in June. However, the recovery of NPAs.........
PSBs to hire 63,200 persons this fiscal
....There were 84,489 vacancies at various levels in state-owned banks at the end of the last financial year. Most of these banks have undertaken recruitment drives in recent years. The public sector banks have a sanctioned strength of about 8 lakh employees as on March 31, 2012.
Statewide launch of e-FMS for MGNREGA wage payments
....The Reserve Bank of India's Deputy Governor H R Khan said banks have been asked to open as many ATMs in rural areas for making money-withdrawal convenient for beneficiaries. Though the Centre had piloted e-FMS in Karnataka, Gujarat, Rajasthan and Odisha in 2010, Odisha is the first to roll out the service after its successful dry run at Sheragada block in Ganjam district in 2010-11. RBI's Khan had introduced the scheme in Ganjam, Gajapati and Mayurbhanj on June 29 this year......
India needs a weaker rupee
....what should RBI’s policy for the rupee be? Judging the ‘right’ level of a currency is more an art than a science. It is intuitive that, ceteris paribus, a country with a faster economic growth should have an appreciating currency while the currency of a country with higher inflation should depreciate relative to that of a country with lower inflation. .....
Commercial banks falter in advancing crop loans
As many as 28 out of 41 commercial banks operating in the state have failed to achieve the 18 per cent lending target stipulated by the Reserve Bank of India (RBI) for the agricultural sector, by September end. Public sector lenders that have fallen short of the target include State Bank of India (15.01 per cent), Allahabad Bank (11 per cent), Andhra Bank (17.02 per cent), Bank of Baroda (15.43 per cent), Canara Bank (11.8 per cent), Central Bank of India (8.28 per cent), Oriental Bank of Commerce(2.1 per cent) and Punjab National Bank (17.87 per cent) among others........
Indian banks hit by slowdown, government to infuse capital: Chidambaram
....Chidambaram said most public sector banks required infusion of additional capital and the government would take a decision on this in a couple of weeks. He said top three banks which required immediate infusion of capital were - Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. "We have a budgetary provision and will allocate the capital to the banks," he said. .....
70% loss cover would have wiped out PSBs' profits
....Though the Reserve Bank of India (RBI) had withdrawn the requirement for 70 per cent loan loss cover from September 2011, private sector banks, whose asset quality is better than their public sector counterparts’, have maintained provision covers of more than 70 per cent........
Lower deposit rate and pass the benefit to borrowers: FM to banks
....According to bankers who attended the meeting, the finance minister wanted to know which banks were still offering nine per cent or more for one-year deposits. “At a time when the central bank has signalled interest rates will ease, some of the banks have even hiked their deposit rates and offering more than nine per cent,” said the chairman and managing director of a public sector bank.......
Bank hands credit card statement to third party, to pay Rs 15L
.......The manager of a Citibank branch in Delhi has been ordered by the Delhi Consumer Disputes Redressal Commission to pay Rs 15 lakh as compensation to a customer whose credit card statement was released to a third party, in violation of Reserve Bank of India guidelines........
Australian bank Westpac opens branch in Mumbai
.....Westpac has been present in the country through a representative office since 2007 and was awarded banking licence by the Reserve Bank of India in April......
Thursday, November 15, 2012
Bankers meet tomorrow on Goa mining crisis
On the directions of the Reserve Bank of India (RBI), Mumbai Regional office, State Bank of India, Lead Bank for Goa, has convened a meeting of the bankers in Goa on Friday to discuss the demand for restructuring\ rescheduling of the loans of the mining stakeholders facing financial crisis. Sources in the Lead Bank, which is coordinating the meeting, told The Hindu on Wednesday that J. B. Bhoria, Regional Director, RBI, Mumbai Region, will chair the meeting. Sources, however, said the meeting was restricted to discuss the issue of the barge loans alone........
ET summit to focus on solutions for poor
....The topics that will be covered in this session of the ET Financial Inclusion are: Regulations that Protect the Poor – Perspectives on the recent RBI regulations and Draft MFI Bill; Designing Insurance to meet the needs of the poor; SHGs, No Frill accounts and Beyond: The Government’s role in Financial Inclusion; and Alternative MFI Financing: Diversifying beyond Bank Funding......
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Banks should abide by RBI guidelines on recovery: FCIK
Srinagar, Nov 14: Valley’s apex industrial body, the Federation Chamber of Industries Kashmir (FCIK) today urged banks operating in the state to strictly abide by the Reserve Bank of India guidelines on loan recovery. .......
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My View on "Can RBI end India’s cronyism?........"
CBI should not probe business decisions- PSBs tell the Finance Minister......
We have been hearing this argument for a long time. It is not advisable to accept this argument especially in the context of the recent justifiably stepped up campaign against rampant corruption in Government and Public Sector enterprises. What is needed are adequate safeguards against ill informed proceedings against top executives of public sector banks which are already provided by the Fraud Board constituted in the RBI to which cases are referred to by the Finance Ministry. The Board scrutinises the papers, calls for such additional evidence as is required and then gives its recommendations to the Finance Ministry. When the Finance Ministry gives its clearance to the CBI, on the basis of the report of the Fraud Board, then only the Preliminary Enquiry (P.E) is converted into a regular case by the CBI. This procedure has been facilitated by the "Single Directive" in terms of which cases against officials in the rank of Joint Secretary and above require clearance from the Government.
The proceedings of the Board in the past have given ample indication where top executives of banks have sanctioned or renewed loans in a fraudulent manner either for illegal gratification or on account of pressure either from political masters or from other sources. The whole process had been done in some of these cases in such a clever manner giving an impression that the recommendation for sanction has been made from the First level officer in the hierarchy whereas the real picture was that it was done at the instance of verbal orders of the top executives !!
- A.Chandramouliswaran (via e-mail)
Govt banks line up 2,000 cr bad loan sale
.....All cash deals of stressed asset deals had dried up in the last few years following introduction of stricter norms by Reserve Bank of India. According to the norms, banks while selling non-performing assets have to work out the net present value of the estimated cash flow associated with the realisable value of the available securities net of the cost of realisation........
Lower inflation not enough for a Dec move by RBI: Barclays
......"While a positive surprise, we think today's print should not be seen as a resounding signal that inflationary pressures are dissipating in India," Barclays said in a research note, adding that "it may not be a game-changer for the RBI's policy guidance".......
There is need to exercise caution on SLR status for corporate bonds
.....After all, the present surplus SLR securities with the banking system alone can generate over Rs 5 lakh crore through open market operations (outright purchase of government bonds by RBI) or through the overnight cash support mechanism through the repurchase window. In implementing the present proposal, the government would only help transfer corporate risks to banks and eventually to itself. In such an eventuality, the government would also effectively loosen its fiscal strings, contradicting its proffered pursuit of fiscal prudence......
The real problem for India is D Subbarao: Shankar Sharma
........I am saying irrespective of that, the markets are going to go up. If this had not happened, the market would still be up because the macro numbers for India have bottomed out. The real problem for India, I have said this many times, is Subbarao. If we fix the mindset of his, you fix a large part of the problem. I do not know whether it is fixable or not. He has now said that in January we will see some action on the rate front, which I find a little bit strange. After all, why would you want to broadcast that out to the world well ahead of the actual event?
Monetary easing by stealth
By claiming CRR is a less powerful monetary instrument, the RBI laid the foundation of its anti-growth image today
The Reserve Bank of India (RBI) Governor has received his fair share of plaudits for resisting what the markets read to be pressure from North Block to cut the repo rate in the October monetary policy. The endorsement seems legitimate to some. If indeed Governor Subbarao was perceived to have kowtowed to the finance minister, this could have damaged the central bank’s credibility in the long term. The bigger question, however, is: can defending the central bank’s autonomy be an end in itself? Or should the governor have acted differently in the interest of the economy and cut the policy rate instead, raised eyebrows over autonomy and independence be damned?.......
Loan loss cover for govt banks dip amid rising NPA
.....Most PSBs have reported PCR less than 70 per cent during the second quarter this year. Earlier, Reserve Bank of India (RBI) had mandated banks to have a minimum 70 per cent PCR but withdrew the norm in September 2011 as asset quality pressure on banks started taking a toll of their profitability..........
RBI needs NIB support
.........With the government now looking a bit tired—the much-promised National Investment Board which was to jumpstart clearances for stalled projects still hasn’t come up—FIIs flows halved in October. The government’s inability to hold its end of the bargain is going to make RBI’s life tougher.
Banks' brazenness
....The present mess in large public sector banks (PSBs) is of their own making. In the wake of the global financial crisis, the Reserve Bank of India (RBI) took a lenient view on non-performing asset (NPA) provisioning, and introduced revised restructuring norms to help affected borrowers. Banks took these as a bonanza. Despite large PSBs making profits, they were unwilling to provide for NPAs......
Several UCBs fall under RBI scalp
The start of the month of November saw many urban cooperative banks coming under the scalp of Reserve Bank of India for one reason or the other.........
‘Cut interest rates’
The Federation of Karnataka Chambers of Commerce and Industry has urged the Reserve Bank of India (RBI) to consider downward revision in the interest rates.........
No rate cut needed
The discouraging data on industrial production and exports have once again become an excuse for entrepreneurs to ask for an interest rate cut. That affects lending rates if banks are dependent on the RBI for funds. This is not the case now. ...
India’s Economy: Limping Along
.......Hence the pressure on the RBI to cut interest rates is heavy, and is increasing as data continues to disappoint. The RBI is maintaining that inflation is its primary concern and is thus not moving interest rates to counter the growth slide, a move which might also weaken the currency and thus exacerbate the trade deficit in the near term. In short, the RBI’s key interest rate is probably going to stay unchanged, as pressure to cut from the slowing economy cancels out inflationary pressure to increase it.
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‘Govt has taken revolutionary steps to boost cooperative sector’
.Highlighting the importance of Cooperative Week, the Minister said that the cooperative movement was launched in India about hundred years ago and the year 2012 has been declared as International Year of Cooperatives. The objective of the cooperative is to help the farmers and poor sections of the society, women folk through cooperative mode. The cooperative has progressed substantially worldwide and millions of people are availing benefits through the network of cooperative movement. The State has also registered satisfactory progress in this sector, particularly during the past three years. He said still lot has to be done in this sector and hoped that the objective will be achieved with the cooperation of all stakeholders.......
Despite threat of bad loans, steady growth to keep Indian banking sector afloat
........The fear about the Indian banking system is almost similar, thanks to the scores of defaults and restructuring of loans to prevent a loan from getting classified as bad. Are the bad loans in the Indian banking system so bad that it can wreck the economy? If history is any indicator, they are not............
FM to meet heads of PSU banks on Thursday
.....The high-profile meeting will be held in the backdrop of the half-yearly review of monetary policy by the Reserve Bank of India (RBI) wherein central bank left benchmark interest rate unchanged on concern of inflation........
My new book will talk about SKS experience: Vikram Akula
....Financial inclusion obviously is my life’s work and I will always be passionate about it. The time is not now for me to come back but perhaps in the future, in the right opportunity in the right context, of course, I am very passionate about the subject......
Micro-finance investors now eye NBFCs
........"There is an increasing amount of private equity coming to NBFCs and we
expect risk capital interest to grow even further. Private equity knows
that there is a huge under-served market, and NBFCs can access the same
in a more efficient manner," said Ramakrishna Nishtala, co-founder and chief operating officer, Vistaar. Recent regulations by RBI have also brought greater confidence to investors.......
Do Stockguru investors have a case against SEBI and RBI?
Stockguru, a chain-money scheme, openly flouted various SEBI rules. Moneylife pointed this out in December 2010 and again in April 2011 but SEBI, under both former chairman CB Bhave and current chairman UK Sinha, and RBI took no action. Aggrieved investors can possibly file a case of gross regulatory lapse against SEBI and RBI.........
Read - Moneylife
Wednesday, November 14, 2012
THE END OF THE DERIVATIVES DREAM
ET
The financial innovations that never were - V.K.Sharma
Keynote Address delivered by V.K. Sharma, Executive Director, Reserve Bank of India, at Finnoviti 2012 organised by Banking Frontiers, Mumbai, India, on November 8, 2012
......A typical, but fallacious, and vacuous, rationalisation offered of this counter-intuitive, warped, wierd and preposterous feature is that while IRS yields are influenced by expected path of future interest rates, those of G-Secs are influenced by their supply!! Nothing could be farther from the truth for this rationalisation turns the very logic and reason on its head. For, as I said, being pure time value of money, G-Secs are influenced by, and immediately price in, inflationary expectations arising from higher fiscal deficit which, in turn, is the cause of additional supply of G-Secs and not the other way round.......
Read - HBL
Can RBI end India’s cronyism?
The central bank should implement the Mahapatra committee proposals speedily without allowing any exceptions
.....the Reserve Bank of India (RBI) should gradually withdraw the cover it provides for politically motivated lending decisions. In other words, it should not dilute its reporting and provisioning standards on loans made, especially to public sector enterprises. Yes, this would show the financial health of the Indian banking sector in poor light. However, allowing sunshine into Indian bank financials is far better than taking a sanguine view of their health based on diluted standards. Moreover, politicians have not used the time afforded by the restructuring to eliminate the underlying causes that give rise to NPAs in the first place.......
Subir Gokarn's fate hangs in balance as panel meets to shortlist candidates
Reserve Bank of India Deputy Governor Subir Gokarn’s fate hangs in balance as a search committee will meet soon to shortlist the names of candidates who will be interviewed for the post. Gokarn (53), who was appointed in 2009, will complete his three year term on November 23. Sources familiar with the developments said Gokarn would appear for the interview for having a second term..........
Read - BS
A search committee met this week to find a likely successor for the man whose inputs are vital for monetary policy making. The man with the look of Marx has been the face of RBI to explain why interest rate was not raised, or not cut. There are many who want to succeed him, given the rising stature of the central bank under D Subbarao. Many wonder whether an economist from a global bank, who was tipped to take the seat last time, will be the person again when the seat falls vacant on November 23?
ET
A search committee met this week to find a likely successor for the man whose inputs are vital for monetary policy making. The man with the look of Marx has been the face of RBI to explain why interest rate was not raised, or not cut. There are many who want to succeed him, given the rising stature of the central bank under D Subbarao. Many wonder whether an economist from a global bank, who was tipped to take the seat last time, will be the person again when the seat falls vacant on November 23?
ET
Archana Bhargava may Join Bank of Maharashtra as ED
Archana Bhargava, the ED of Canara Bank, is likely to be moved to Bank of Maharashtra as the bank’s second ED, so says the rumour mill. She rose to the rank of GM at PNB before joining Canara Bank as ED in March 2011. According to the banking sector, earlier she was to be promoted to one of the small-sized PSU banks as CMD, but now there appears to be some kind of rethinking. Meanwhile, the government is yet to appoint a CMD at Canara Bank after S Raman retired in September 2012.
ET
Should RBI control cooperative banks ?
Three selfless cooperators have thrown themselves into analyzing the ills/benefits of RBI control of cooperative banks on the platform of Indiancooperative.com. We think it in the fitness of things to publish it for the benefit of the people in general.........
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The RBI's smoke and mirrors
.........Monetary policy is a blunt tool, and only the RBI can know how it will ensure credit to productive sectors by keeping the repo rate unchanged. It is true that the RBI has to deal with several constraints, some of which are fallout of government inaction. Consequently, monetary policy alone cannot be the lasting solution to India’s inflation. Still, the RBI will achieve better success if it comes across as being less confused about what it is trying to fix: low growth or still-high inflation. In the absence of such clarity, it’ll have little success, as has been the case.
Banking lokpal planning to offer SMS facility
JAISALMER: Efforts have been stepped up to create awareness about the banking lokpal system in the country and results so far have been encouraging as there is a significant increase in the filing of complaints by consumers, said Rajasthan head of banking lokpal.........
Read - TOI
Build robust mechanism to prevent e-banking fraud: RBI
.......The Reserve Bank of India wants banks to build a robust mechanism to prevent incidents of fraud in areas of mobile/Net banking and electronic fund transfer. “With greater infusion of technology in banking, the incident of frauds in Internet banking has witnessed an increase in recent times. Banks need to improve customer awareness to contain incidents of frauds involving customers,” the RBI said in its latest Report on Trend and Progress of Banking in India.....
Flouting the norm
......... With just about two months before these cheques become invalid, at least one public sector bank, Central Bank of India, continues to flout the RBI directive. As late as October 31, 2012, customers have been issued cheque-books that are not in accordance with the stipulated CTS-2010 standard........
CRR cut won't have much impact on liquidity or interest rates
.....The FM has been asking the RBI to take action, while the RBI has been selective this year in terms of lowering the repo rate (April) and the CRR (February, March, September and October). The RBI evidently sees interest rates and inflation
more from a macro view and implicitly looks at real interest rates.
But, how do banks react to rate cuts? Are they really sensitive to rate
changes or are they just asking for more? ......
Assocham submits infrastructure growth roadmap to FinMin
...... It suggested that banks may be permitted to issue long-term, tax free bonds for the purpose of lending to infrastructure sector at a lower rate of interest. Provisions may also be made by the Reserve Bank of India (RBI) to provide interest subsidies to the banks for their exposure in this sector, it said.........
Playing the victim after getting caught
......In 1992, the enactment of a Special Court (Trial of Offences Relating to Transactions in Securities) Act ensured that some were carefully kept out of the net. ANZ Grindlays Bank, which credited cheques issued by various banks to the account of scam-accused Harshad Mehta, was untouched by the civil and criminal cases of the Special Court. It was permitted to enter into long-winded arbitration proceedings with State Bank of India (SBI) and the National Housing Bank (NHB). The Bank had infamously argued that crediting cheques to brokers’ accounts was ‘an accepted market practice’. One may argue that treating ANZ gently was done in the national interest, since India had just managed to avoid a default on external borrowings. The manoeuvre saved the Reserve Bank of India (RBI) from embarrassment. After all, NHB was a wholly-owned subsidiary and RBI deputy governors graced the SBI’s board. ......
Read - Moneylife
The core of the inflation debate
.... As monetary policy transmission has a lagged impact on inflation, central banks tend to be forward-looking and factor in the expected changes in core inflation, rather than respond to temporary cost-push pressures. Keeping this in mind, RBI has hinted at a further loosening of monetary policy, perhaps a rate cut in early 2013. Nonetheless, while core inflation could moderate in the coming months, high food and fuel inflation will keep WPI inflation well above RBI’s stated tolerance limit of 4.5-5% for the foreseeable future. This will still make it difficult for RBI to communicate the rationale behind a repo rate cut, as and when it is done......
Cut and thrust
..........The friction, however, is far from over. It now appears that RBI Deputy Governor Subir Gokarn, 53, who strongly backs inflation-control over growth, may not get an extension, though he is well below the retirement age of 62 years. The government has constituted a search panel to replace Gokarn whose term expires on November 23. Also, the finance ministry is likely to dig deep into the RBI's accounts books, as it is the government that tables the central bank's accounts in Parliament. Perhaps, Chidambaram would soon be able to show Subbarao who is the boss............
Asset liabilities
....The only way to curb formation of NPAs in banks is to discipline the borrowers by strict appraisal standards and close monitoring of loan accounts. They need to be rated based on their conduct of loan accounts. Banks should levy a small fine when their performance deteriorates.....
Electronic transactions rise 53% in first half of fiscal: RBI
Electronic transactions in the country in first nine months were reported at Rs 14,88,353 crore rising 53% over similar period last year according to the data released by the Reserve Bank of India (RBI). Electronic transactions include electronic clearing services (ECS), national electronic funds transfer (NEFT) and card payments (credit and debit).............
Big loopholes in farm credit
The RBI closes some, but many others still exist
....Some loopholes that allowed banks to avoid lending directly to farmers and yet claim to be meeting farm credit targets have recently been plugged by the Reserve Bank of India (RBI) when it altered priority-sector lending norms. Most banks found extending finance to agricultural institutions far more convenient than loaning funds directly to farmers, which entailed a higher recovery risk and transaction cost. Thus, the share of indirect credit in total agricultural credit supplied by commercial banks surged from 11 per cent in the mid-1990s to nearly 30 per cent in 2011......
CBI should not probe biz decisions, public sector banks tell FinMin
Top public sector bank officials have told the Finance Ministry and the Reserve Bank of India that the Central Bureau of Investigation should not call into question the commercial decisions taken by them in good faith. They warned that if the investigating agency starts questioning the commercial decisions taken for growing the loan book, then the decision-making process as well as the officers’ morale will be affected............
RRBs need to open 1,700 branches this fiscal: RBI report
.....The Government’s plan to recapitalise RRBs is yet to gain momentum in some States. Based on the recommendations of the K.C. Chakrabarty committee to study the current level of capital to risk-weighted assets ratio (CRAR) of RRBs, the Government had announced a recapitalisation programme in 40 of the 82 RRBs to ensure that their CRAR level reaches nine per cent by March 2012......
RBI to banks: Show action taken on unhedged forex risks
At a time when the risks from unhedged foreign currency exposure of companies has emerged as a big scare for the banking sector, the Reserve Bank of India (RBI) has directed banks to furnish action taken reports on the issue before end-December 2012. The direction on filing the compliance reports stems from the RBI advisory in February under which banks were told that they should “rigorously evaluate the risks” arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium while extending fund-based and non fund-based credit facilities..........
Retail inflation up at 9.75 % in Oct
Vindicating Reserve Bank of India Governor D. Subbarao’s stand on not easing interest rates during the monetary policy review last month on account of persistent inflationary pressures, retail inflation moved closer to double digits at 9.75 per cent in October from 9.73 per cent in the previous month. As per the CPI (consumer price index) data released here on Monday, even as the month-on-month rise in the price spiral appears to be minuscule, the fact remains that there is as yet no sign of a cooling-off to suggest a downtrend in inflation in the near-term........
Bleak economic scenario
.....The RBI cannot be expected to surrender its remit to hold inflation within reasonable limits. At 9.75 per cent consumer price inflation is at least four per cent too high for anyone's comfort. Hence the refusal by RBI Governor D Subbarao to reduce the prime lending rate at the time of the latest monetary review a few days ago. Should CPI continue to stay high, it is unlikely the central bank would cut the policy rate even in the fourth quarter. If Chidambaram is keen on rate- reduction, he should first tackle the burgeoning fiscal deficit.
More than a lakh ATMs in India; SBI controls 59%
........The NPCI has been an umbrella organization created by the Reserve Bank of India, which acts as an umbrella body to monitor all payments through ATMs, and looking at transactions between banks regarding these machines. For this reason, the National Financial Switch is operational to monitor the connectivity and keep an eye on the registeration of the ATMs. Banks actually have to furnish details of their ATm network wherever there is one................
Read......
Now, Mastercard with LCD screen, built-in keyboard
Mastercard in Singapore has launched a new credit card that has an LCD display and built-in keyboard. The card has touch-sensitive buttons and the ability to create a ‘one-time password’, doing away with the need for a separate device sometimes needed to log in to online banking....
For banks, all that glitters is coins
....“There is definitely some traction in sales vis-Ã -vis last year despite the rise in price of gold. There is less mark-up due to surging gold rates. However, we do anticipate a growth of about 20 per cent compared with last year,”........
Monday, November 12, 2012
Happy Diwali.............
VITALINFO wishes its
readers a very happy and prosperous Diwali. Countdown has begun to celebrate the 2nd Anniversary of VITALINFO on 29th November 2012.......
Decimating Reserve Bank of India
It was in March 2012 that the Economist, London, showered praise on Reserve Bank of India ( RBI), " Judging by the numbers, RBI is among the world's best central banks. Its record on banking, growth and inflation is decent enough". The journal also gave credit to RBI for escaping Asian currency crisis of 1997 and the more recent global financial crisis of 2008. The Economist emphasised: " Relative to most Indian state bodies, the RBI has more brains, muscle and integrity. It is about the only institution in the country you never hear accused of graft". RBI has thus made us proud and one would have thought that the Government of India would make every effort to further strengthen the institution. Alas! This does not seem to be so. On the other hand, there are efforts to cut it down to its size and to decimate it. Perhaps rulers like sycophancy and nobody accuses RBI of being docile. In fact it is its independent thinking which has raised its stature to its present heights.........
.....Restricting RBI functions to monetary policy formulation and supervision of banks is neither logically sustainable nor practicable. It would serve no purpose except decimating RBI. The FSLRC would do well to revisit the whole range of issues involved........
In His Fight with Finmin, Subbarao Gets PM Support
.......The father of economic reforms, and a former central bank Governor, made no secret of where his sympathies lie in the duel between the finance ministry and the central bank over the direction of interest rates amid stubbornly high prices. Industry bodies have also been urging the RBI to cut rates to boost economic growth, which is likely to slide to 6% for the year ending March 31, 2013, compared with over 8% in 2010-11. “Central banks have to balance the compulsions of stimulating growth and controlling inflation,” Singh told titans of the corporate world assembled at The Economic Times Awards for Corporate Excellence. “Both are important. But we must recognise that lower inflation is good both for growth and for making growth more socially inclusive,” said Singh. “The Reserve Bank of India has sought to support a revival of growth by reducing the CRR successively over two quarters.”.........
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